BlackRock is looking more like a mountain

Commentary: Larry Fink is outdoing Goldman when it comes to government aid

NEW YORK (MarketWatch) -- For those worried about the Federal Reserve gaining too much power, remember this: the central bank at least answers on occasion to the government, which can revoke its charter and authority.

Compare the Fed to another growing and powerful institution: BlackRock Inc.
BLK, -0.46%
the institutional asset manager tapped to manage and assess the hundreds of billions of government bailout programs and now may have a say over the ratings handed out to insurance companies and the risks in their investment portfolios. See full story.

Unlike the Fed, which is a quasi private-public institution aimed in theory at keeping people employed and prices stable, BlackRock is a purely private and purely profit- driven firm. Under Chief Executive Laurence Fink, BlackRock has also been a prime mover in the government's efforts to keep the capital markets moving.

BlackRock was hired to manage the portfolios of Bear Stearns Cos. and American International Group Inc.
AIG, +0.02%
BlackRock also is responsible for valuing hard-to-price assets at Fannie Mae
FNM, +1.38%
and Freddie Mac
FRE, +2.65%
It manages a $46 billion fund for the New York Fed that buys assets underlying credit-default swaps written by AIG, an assignment at the behest of the New York Fed.

Those are the public assignments, but there's more, of course. BlackRock helped shape the administration's plan to rid banks of toxic assets and it's been named one of nine managers of the Public-Private Investment partnership.

There are so many roles, it's hard to keep track. But the point is this: BlackRock is both setting the prices for assets and acting as buyer. Now, BlackRock may be charged with judging the viability of insurers who, if they are not already, could be potential customers for their core investment management business.

BlackRock's conflicts would make bailout pariah Goldman Sachs Group Inc.
GS, +0.17%
blush. For if you believe Goldman, with all of its influence with the Treasury Department and the Fed, rigged the game, BlackRock appears to have come away the winner.

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